In MB, what should I know about loan-to-value (LTV) for car loans?

Loan-to-Value (LTV) in Manitoba, as across Canada, is a fundamental metric for car loans, representing the ratio of the amount you borrow to the appraised value of the vehicle. It's calculated by dividing the total loan amount (which can include the vehicle price, taxes, and sometimes extended warranties or other fees rolled into the financing) by the lender's determined value of the vehicle. This value is typically assessed using industry-standard wholesale guides like Canadian Black Book or Kelley Blue Book, or through a dealer's appraisal.

Lenders cap LTV to manage their exposure to risk. A lower LTV signifies that you, the borrower, have more equity in the vehicle from the outset, which reduces the lender's potential loss if the loan defaults and the vehicle needs to be repossessed and sold. In the current 2025 market conditions, characterized by evolving interest rates and vehicle depreciation, lenders in Manitoba and nationwide are often more conservative, typically setting LTV caps between 100-120% for new vehicles and potentially lower for used vehicles, depending on their age, condition, and market demand.

For consumers in Manitoba, understanding LTV is crucial because it directly impacts your financing options. A higher LTV (meaning a smaller or no down payment) can make loan approval more challenging, potentially lead to a higher interest rate due to increased lender risk, and increase the likelihood of being "upside down" on your loan (owing more than the car is worth) early in the term. Conversely, a lower LTV, achieved through a substantial down payment, can significantly improve your chances of loan approval, help secure a more favourable interest rate, and provide immediate equity, offering greater financial flexibility and protection against depreciation. While there are no unique Manitoba-specific LTV *regulations* for car loans, these principles are universally applied by lenders operating within the province, adhering to general Canadian lending standards and consumer protection laws.